Talks between Manila Electric Co.’s power generation unit Meralco PowerGen Corp. and Osaka Gas of Japan are progressing for the construction of a 1,500-megawatt liquefied natural gas integrated facility in Luzon.
Yoshihiko Kimata, chairman’s representative of Osaka Gas Singapore Pte. Ltd., told reporters the company and Meralco PowerGen “are communicating periodically.”
Kimata said the joint feasibility study for the planned project is still in progress.
“It’s going on,” he said, although he did not provide a timeline for the implementation of the project.
“At this moment, we are more interested with the Meralco project. We have limited resources so we cannot look [at] many projects at the same time,” he said.
Meralco PowerGen officials earlier said the 1,500-MW LNG facility was estimated to cost $2 billion.
Meralco PowerGen plans to make its final investment decision on the project within the year.
Meralco chairman Manuel Pangilinan earlier said talks were ongoing while the feasibility study remained to be conducted.
“We’ll find out before the end of the year if it’s a go,” Pangilinan said.
Pangilinan said the parties were looking at an integrated natural gas facility that would include an LNG terminal and power plant.
“You need a gassification plant because we need to import gas. There is no more gas from Malampaya for the size of the plant. So, there will be a gassification facility and a power plant,” he said.
The regasification facility will convert the imported LNG to natural gas for delivery to the power plant.
He said Meralco would likely take a 60-percent stake in the project while Osaka Gas would own 40 percent, if the plans pushed through.
Pangilinan said the natural gas plant “might be done in phases, but it is up to 1,500 MW.”
He said the capital cost for an LNG plant “is not that much expensive than coal.”
“The capex [capital expenditure] is actually lower than a coal plant per megawatt, but the problem is the higher cost of power,” he said.
Pangilinan said he expected the project to materialize in the next three to five years.
Osaka Gas is a key player in Japan’s LNG market and imports about 7.9 million tons per year, representing 9 percent of Japan’s total LNG imports, mostly from the Middle East (Qatar and Oman), Southeast Asia (Malaysia, Indonesia, and Brunei), Australia and Russia.
The Japanese company has stakes in six LNG carriers. Osaka Gas also operates two world-class LNG receiving terminals, including the Himeji and the Senboku terminal.